This chapter aims to provide tools for thinking about capitalism as a system in motion, rather than one which, in its fundamentals, has come to a stop. Capitalism at its best rewards creators, ...
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This chapter aims to provide tools for thinking about capitalism as a system in motion, rather than one which, in its fundamentals, has come to a stop. Capitalism at its best rewards creators, makers, and providers: the people and firms that create valuable things for others, like imaginative technologies and good food, cars and healthcare which, at their best, delight and satisfy. Its moral claim is to provide an alternative to the predatory, locust-like tendencies of states and feudal rulers. It rewards the people who work hard and innovate, the human equivalents of industrious bees, and by doing so makes everyone better off, more than any other economic system in human history.Less

After Capitalism

Geoff Mulgan

Published in print: 2015-03-09

This chapter aims to provide tools for thinking about capitalism as a system in motion, rather than one which, in its fundamentals, has come to a stop. Capitalism at its best rewards creators, makers, and providers: the people and firms that create valuable things for others, like imaginative technologies and good food, cars and healthcare which, at their best, delight and satisfy. Its moral claim is to provide an alternative to the predatory, locust-like tendencies of states and feudal rulers. It rewards the people who work hard and innovate, the human equivalents of industrious bees, and by doing so makes everyone better off, more than any other economic system in human history.

This chapter investigates industrial restructuring in the slow‐growing food industry in the USA, asking why an industry with a growth factor of less than 1% flourishes in a world in which companies ...
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This chapter investigates industrial restructuring in the slow‐growing food industry in the USA, asking why an industry with a growth factor of less than 1% flourishes in a world in which companies strive for growth rates of 10% or more. It first looks at the industrial composition (sectoral distribution) of the Fortune 500 [the largest 500 companies in the US as listed by Fortune Magazine, on the basis of publicly available data], and at the industrial restructuring that occurred in the 1980s in the US economy, showing a breakdown of consumer products into cyclical and noncyclical groups. The food industry is in the noncyclical group, which increased its share of revenues while decreasing its share of companies in the Fortune 500. Other sections of the chapter look at the following: consolidation through mergers and acquisitions; financial innovations – the ability to use public markets for leveraged financing and a possibly more heavy reliance (of noncyclical companies) on high‐yield bond financing (for which evidence is presented); the financing of biotechnology for food production and the associated structural change in production; the impact of the combination of high‐yield financing and high tech in the food industry; and foreign and international influences.Less

Industrial Restructuring

Glenn YagoSusanne Trimbath

Published in print: 2003-05-15

This chapter investigates industrial restructuring in the slow‐growing food industry in the USA, asking why an industry with a growth factor of less than 1% flourishes in a world in which companies strive for growth rates of 10% or more. It first looks at the industrial composition (sectoral distribution) of the Fortune 500 [the largest 500 companies in the US as listed by Fortune Magazine, on the basis of publicly available data], and at the industrial restructuring that occurred in the 1980s in the US economy, showing a breakdown of consumer products into cyclical and noncyclical groups. The food industry is in the noncyclical group, which increased its share of revenues while decreasing its share of companies in the Fortune 500. Other sections of the chapter look at the following: consolidation through mergers and acquisitions; financial innovations – the ability to use public markets for leveraged financing and a possibly more heavy reliance (of noncyclical companies) on high‐yield bond financing (for which evidence is presented); the financing of biotechnology for food production and the associated structural change in production; the impact of the combination of high‐yield financing and high tech in the food industry; and foreign and international influences.

This chapter presents many economic arguments in support of value(s)-based management, the idea that CSR fits in well within a VBM framework because CSR appears to make good business sense. Corporate ...
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This chapter presents many economic arguments in support of value(s)-based management, the idea that CSR fits in well within a VBM framework because CSR appears to make good business sense. Corporate social responsibility follows from the premise that it is important for a firm to operate in a socially responsible manner that considers the importance of all of its stakeholders and how they contribute to the company's long-term, sustainable creation of value. Economic arguments that support the business purpose of CSR include the fact that it can help recruit and retain employees, provide reputational risk management, assist in differentiating firm branding, and help avoid governmental scrutiny and interference. The existing academic evidence is consistent with the economic arguments supporting a firm's development of a CSR program.Less

Corporate Social Responsibility: Putting the S in Value(s)-Based Management

John D. MartinJ. William PettyJames S. Wallace

Published in print: 2009-10-01

This chapter presents many economic arguments in support of value(s)-based management, the idea that CSR fits in well within a VBM framework because CSR appears to make good business sense. Corporate social responsibility follows from the premise that it is important for a firm to operate in a socially responsible manner that considers the importance of all of its stakeholders and how they contribute to the company's long-term, sustainable creation of value. Economic arguments that support the business purpose of CSR include the fact that it can help recruit and retain employees, provide reputational risk management, assist in differentiating firm branding, and help avoid governmental scrutiny and interference. The existing academic evidence is consistent with the economic arguments supporting a firm's development of a CSR program.

This chapter presents a fundamental component of every firm's internal control system, its compensation program. The basic paradigm espoused by the proponents of VBM is that what a firm measures and ...
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This chapter presents a fundamental component of every firm's internal control system, its compensation program. The basic paradigm espoused by the proponents of VBM is that what a firm measures and rewards will get done. Consequently, the compensation program must measure employees’ activities that contribute toward wealth creation and reward those efforts. In essence, the compensation plan should pay employees to think and act like owners. Both the level of compensation and its form and composition are discussed. Many observed problems and potential remedies are presented. One characteristic that firms must be aware of is the public's perception that executive compensation has become unacceptably excessive. A complete VsBM program must consider the political implications of its behavior as these perceptions can and do effect a firm's reputation and ultimately its wealth-creating ability. One mechanism for addressing these perceptions is to consider fairness criteria when designing a compensation program.Less

Incentive Compensation: What You Measure and Reward Is What Gets Done

John D. MartinJ. William PettyJames S. Wallace

Published in print: 2009-10-01

This chapter presents a fundamental component of every firm's internal control system, its compensation program. The basic paradigm espoused by the proponents of VBM is that what a firm measures and rewards will get done. Consequently, the compensation program must measure employees’ activities that contribute toward wealth creation and reward those efforts. In essence, the compensation plan should pay employees to think and act like owners. Both the level of compensation and its form and composition are discussed. Many observed problems and potential remedies are presented. One characteristic that firms must be aware of is the public's perception that executive compensation has become unacceptably excessive. A complete VsBM program must consider the political implications of its behavior as these perceptions can and do effect a firm's reputation and ultimately its wealth-creating ability. One mechanism for addressing these perceptions is to consider fairness criteria when designing a compensation program.

This chapter examines the link between the global food crisis and the financial crisis. More specifically, it considers the dramatic increase in world food prices in 2007–2008, attributing it mainly ...
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This chapter examines the link between the global food crisis and the financial crisis. More specifically, it considers the dramatic increase in world food prices in 2007–2008, attributing it mainly to greater speculative activity in global commodity markets in response to earlier financial deregulation and the flight of capital from Wall Street following the bursting of the housing bubble with the sub-prime mortgage crisis in the United States. Despite the subsequent drop in agricultural prices, food prices remained higher than before 2007, and continued to be volatile in many developing countries. The chapter discusses two policy factors affecting global food supply: bio-fuels and the policy neglect of agriculture over the past two decades. It explains how the financial crisis has worsened food insecurity by constraining public investment in agriculture, limiting food imports in developing countries constrained by balance of payments.Less

The Unnatural Coupling : Food and global finance

Jayati Ghosh

Published in print: 2011-01-17

This chapter examines the link between the global food crisis and the financial crisis. More specifically, it considers the dramatic increase in world food prices in 2007–2008, attributing it mainly to greater speculative activity in global commodity markets in response to earlier financial deregulation and the flight of capital from Wall Street following the bursting of the housing bubble with the sub-prime mortgage crisis in the United States. Despite the subsequent drop in agricultural prices, food prices remained higher than before 2007, and continued to be volatile in many developing countries. The chapter discusses two policy factors affecting global food supply: bio-fuels and the policy neglect of agriculture over the past two decades. It explains how the financial crisis has worsened food insecurity by constraining public investment in agriculture, limiting food imports in developing countries constrained by balance of payments.

The 1944 Bretton Woods conference created new institutions for international economic governance. Though flawed, the system led to a golden age in postwar reconstruction, sustained economic growth, ...
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The 1944 Bretton Woods conference created new institutions for international economic governance. Though flawed, the system led to a golden age in postwar reconstruction, sustained economic growth, job creation, and postcolonial development. Yet financial liberalization since the 1970s has involved deregulation and globalization, which have exacerbated instability, rather than sustained growth. In addition, the failure of Bretton Woods to provide a reserve currency enabled the dollar to fill the void, which has contributed to periodic, massive U.S. trade deficits. The latest global financial crisis, in which all these weaknesses played a part, underscores how urgently we must reform the international financial system. Prepared for the G24 research program, a consortium of developing countries focused on financial issues, this book argues that such reforms must be developmental. It reviews historical trends in global liquidity, financial flows to emerging markets, and the food crisis, identifying the systemic flaws that contributed to the recent downturn. It challenges the effectiveness of recent policy and suggests criteria for regulatory reform, keeping in mind the different circumstances, capacities, and capabilities of various economies. The book follows ongoing revisions in international banking standards, the improved management of international capital flows, the critical role of the World Trade Organization in liberalizing and globalizing financial services, and the need for international tax cooperation. It also proposes new global banking and reserve currency arrangements.Less

Reforming the International Financial System for Development

Published in print: 2011-01-17

The 1944 Bretton Woods conference created new institutions for international economic governance. Though flawed, the system led to a golden age in postwar reconstruction, sustained economic growth, job creation, and postcolonial development. Yet financial liberalization since the 1970s has involved deregulation and globalization, which have exacerbated instability, rather than sustained growth. In addition, the failure of Bretton Woods to provide a reserve currency enabled the dollar to fill the void, which has contributed to periodic, massive U.S. trade deficits. The latest global financial crisis, in which all these weaknesses played a part, underscores how urgently we must reform the international financial system. Prepared for the G24 research program, a consortium of developing countries focused on financial issues, this book argues that such reforms must be developmental. It reviews historical trends in global liquidity, financial flows to emerging markets, and the food crisis, identifying the systemic flaws that contributed to the recent downturn. It challenges the effectiveness of recent policy and suggests criteria for regulatory reform, keeping in mind the different circumstances, capacities, and capabilities of various economies. The book follows ongoing revisions in international banking standards, the improved management of international capital flows, the critical role of the World Trade Organization in liberalizing and globalizing financial services, and the need for international tax cooperation. It also proposes new global banking and reserve currency arrangements.

This chapter examines food prices from 1900 to 2015. Despite growing populations, rising incomes, new technologies, globalization, and the emergence of commodities as an asset class, no trends are ...
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This chapter examines food prices from 1900 to 2015. Despite growing populations, rising incomes, new technologies, globalization, and the emergence of commodities as an asset class, no trends are evident in food price levels or volatility. Still, food prices have averaged higher since 2010, harming the poor and raising fears that agricultural productivity growth has slowed. Consistently since 1900, food prices have been more volatile than the prices of manufactured goods and most other commodity groups. This relation drives terms-of-trade volatility, which slows economic growth. At the farm level, price volatility impedes investment and technology adoption, and encourages low-income livelihood strategies. Past policies to manage food prices have not worked and governments have shifted to policies aimed at mitigating the consequences of high and volatile food prices. Extending the reach of risk markets, warehouse receipt systems, index insurance, and contract farming can be useful policy components.Less

Food Prices and Food Price Volatility

Donald F. Larson

Published in print: 2018-08-30

This chapter examines food prices from 1900 to 2015. Despite growing populations, rising incomes, new technologies, globalization, and the emergence of commodities as an asset class, no trends are evident in food price levels or volatility. Still, food prices have averaged higher since 2010, harming the poor and raising fears that agricultural productivity growth has slowed. Consistently since 1900, food prices have been more volatile than the prices of manufactured goods and most other commodity groups. This relation drives terms-of-trade volatility, which slows economic growth. At the farm level, price volatility impedes investment and technology adoption, and encourages low-income livelihood strategies. Past policies to manage food prices have not worked and governments have shifted to policies aimed at mitigating the consequences of high and volatile food prices. Extending the reach of risk markets, warehouse receipt systems, index insurance, and contract farming can be useful policy components.